A Really Disruptive Technology

The term disruptive technology has gained currency as writers try to explain how Uber has a taxi business but no cars, and Airbnb has an accommodation business but no properties. Now there is a new technology that may enable us to dispense with the institutions that settle commercial transactions. This could be really disruptive.

Professor Christensen, from Harvard, coined the term disruptive technology to distinguish between business strategies that relied on incremental improvements and ones that displaced existing technology, in many cases creating a completely new industry. Professors Kim and Mauborgne, from INSEAD, promote the latter in Blue Ocean Strategy.

Disruptive technologies have occurred throughout history; the printing press, the coal fired steam engine, and automobiles for instance.

More recently the personal computer has enabled millions of individuals to become authors of their own content in digital form – words, numbers, music, maps, photographs, voice and video. The Internet, the World Wide Web and the wiring of the world with fibre optic cable has made global communications affordable. So now you can be at home, or at work, or on the move, create material and make it accessible to colleagues in the next office, or anywhere in the world.

Emails have replaced letters and the need for a postal service. You can do your banking on-line so you no longer need physical branches. You can book your own travel and accommodation obviating the need for travel agencies. Your ERP business systems can link departments within your organisation and your customers and suppliers in a supply chain.

In a fascinating article The Future is Decentralized in The Austrian, a bi-monthly magazine from the Mises Institute, Patrick Byrne proposes to use the block chain technology, which was developed for Bitcoin, to replace the institutions that process the settlement of cheques, securities, and land titles. Apparently, Washington, the Reserve Bank and Wall Street find this unsettling, to say the least.

The block chain technology fits nicely with Byrne’s philosophical commitment to decentralized decision making. “I know the smart people are on the front lines; the smart people with ideas; the smart people who understand the marketplace and the customer. So my job is to build institutions that let that distributed intelligence express itself. So, in my businesses, I have built various mechanisms that let innovation come from the front lines, from customer agents, from people in marketing. I want an institution that can let the knowledge of 2,000 colleagues form the new ideas, and their colleagues can work together to decide how to use the knowledge.”

Byrne believes: “information is best used when it is not centralized and when it is not being monopolized by some central institution… New innovations like the block chain can make this possible.”

About the Author

For thirty-five years, Peter managed Fenwick Software which he founded in 1976. In 2011, he established an employee shareholder scheme and six of his long-term staff now own seventy-five percent of the company; one of them, Greg Galloway, manages the business. Peter remains involved part-time as a director.

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